British Land sells 5 racquet clubs to institutional investors

UK REIT British Land has sold five of the Virgin Active racquet clubs to three institutional investors. The disposal price of £33 mln (EUR 40 mln) reflects an average net initial yield of 6.5%.

The five assets were part of a portfolio of 17 Virgin Active properties that British Land acquired in July 2011 from Société Generale for £179 mln, at an average net initial yield of 7.3% and a net equivalent yield of 8.4%.

The properties are on 25-year leases with a fixed uplift at year five, followed by annual RPI (retail price index) uplifts of between 1-4% per annum for the remainder of the lease term.

The five assets, located in the UK cities of Gloucester, Neath, Manchester, Oxford and Poole, are among the smallest in the portfolio, and with the exception of Oxford, are located outside the South East.

Charles Maudsley, head of retail for British Land, said: 'I am pleased with the level of institutional demand we have seen for these assets. This reflects the high quality of the assets and demonstrates our ability to work successfully with banks and other sellers to unlock opportunities and create incremental value for our shareholders.'

Lewis & Partners acted for British Land in the disposal.

British Land is one of the largest real estate investment trusts in Europe with total assets, owned or managed, of £15.7 bn. Retail assets account for 61% of our portfolio, over 80% of which are located at prime out-of-town sites.

London offices, located in the City and West End, comprise 33% of the portfolio. The company has committed a further £1.1 bn to its Central London office development programme, which will deliver 204,000 m² of new space by 2014.